Expenditure of Indian IT sector to rise to $26 billion: TeamLease

IT companies are projected to experience a 13.8% increase in expenditure in 2024, amounting to $26.1 billion, according to data released by TeamLease Digital. This marks a notable leap from the previous year's growth of around 5% to $22.9 billion. This surge is driven by clients' focus on enhancing organisational efficiency through digital optimisation projects.

The report further states that, according to industry data, Indian digital spending is projected to increase from $30 billion in 2020 to $85 billion by 2026, reflecting a compound annual growth rate (CAGR) of 18.9% during the forecast period of 2020–26.

Top sectors heavily investing in digitisation include Information Technology (IT) and Business Process Management (BPM), Telecom and Digital Communication Services, Financial Services (Fintech), Education (Edtech), Healthcare (Healthtech), Retail and e-commerce, and Travel and Tourism, the data reveals. This technological shift not only replaces jobs but also creates new opportunities in the job market while automating tasks through advanced technology.

"As these sectors continue to innovate, India's digitisation efforts promise to transform various aspects of society and business," said Krishna Vij, business head, TeamLease Digital.

It highlights that by 2025, India's digital economy could potentially create 60–65 million jobs and generate up to $1 trillion in economic value, an increase from the current $200 billion.

Overall, IT spending is expected to rise by 13.3% to $138.9 billion, with a surge in spending on devices by 17% to $55.8 billion.

Addressing the demand-supply gap in skilled AI professionals remains crucial. To bridge this gap, IT companies are not just investing in technology but are also implementing strategies such as government vocational training programs, corporate training initiatives, online learning platforms, and promoting self-directed learning to upskill the workforce.

Investments in digitisation have a dual impact on job markets. “On one hand, automation of repetitive, rule-based tasks can lead to job displacement, particularly in sectors like manufacturing, data entry, and bookkeeping. On the other hand, digitisation creates new job opportunities, such as data scientists, cybersecurity analysts, and specialists in AI and machine learning,” it states.

India's expanding internet user base, currently at around 750 million, is a market for digital services and solutions. This surge in digital spending is anticipated to enhance productivity across sectors, with companies heavily investing in AI-related platforms.

"Overall, India could potentially see a five-fold increase in economic value from digital transformation by 2025, representing an attractive opportunity for global and domestic businesses, start-ups, and innovators to invest in emerging technologies," it states.

The focus on AI and cloud technologies is expected to persist as a central theme in companies' strategic initiatives, fueling continuous investment in these transformative technologies.